Question

In: Accounting

Golden Corp.'s current year income statement, comparative balance sheets, and additional information follow.

Golden Corp.'s current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes.

GOLDEN CORPORATION
Comparative Balance Sheets
December 31
  Current Year   Prior Year
Assets                      
Cash   $ 171,000         $ 114,700    
Accounts receivable     93,500           78,000    
Inventory     611,500           533,000    
Total current assets     876,000           725,700    
Equipment     353,800           306,000    
Accum. depreciation—Equipment     (161,500 )         (107,500 )  
Total assets   $ 1,068,300         $ 924,200    
Liabilities and Equity                      
Accounts payable   $ 101,000         $ 78,000    
Income taxes payable     35,000           28,600    
Total current liabilities     136,000           106,600    
Equity                      
Common stock, $2 par value     600,400           575,000    
Paid-in capital in excess of par value, common stock     208,600           170,500    
Retained earnings     123,300           72,100    
Total liabilities and equity   $ 1,068,300         $ 924,200    
 

  

GOLDEN CORPORATION
Income Statement
For Current Year Ended December 31
Sales       $ 1,827,000  
Cost of goods sold         1,093,000  
Gross profit         734,000  
Operating expenses            
Depreciation expense $ 54,000        
Other expenses   501,000     555,000  
Income before taxes         179,000  
Income taxes expense         31,800  
Net income       $ 147,200  
 


Additional Information on Current Year Transactions

  1. Purchased equipment for $47,800 cash.
  2. Issued 12,700 shares of common stock for $5 cash per share.
  3. Declared and paid $96,000 in cash dividends.

Problem 12-6A Indirect: Statement of cash flows LO P2, P3

Required:
Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.)

Solutions

Expert Solution

Solution

GOLDEN CORPORATION
Cash flow Statement  
For the Year ended December 31
Cash Flow from Operating Activities:
Net Income $     147,200.00
Adjustments to reconcile net income to net cash provided by operations
Income statement items not affecting cash
Depreciation Expense $        54,000.00
Changes in current assets and current liabilities
Increase in Accounts Receivables $     (15,500.00)
Increase in Inventory $     (78,500.00)
Increase in Accounts payable $        23,000.00
Increase in Income taxes payable $          6,400.00
A. Net Cash provided by Operating Activities $   136,600.00
cash flow from investing activities
Purchase of Equipment $     (47,800.00)
B.Net cash used in investing activities $   (47,800.00)
Cash flows from Financing activities
Payment of Dividend $     (96,000.00)
Issue of Common Stock $        63,500.00
C. Net cash Used in financing activities $   (32,500.00)
(A+B+C) Net increase (Decrease) in cash and Cash Equivalent $     56,300.00
Cash balance, December 31, prior year $   114,700.00
Cash balance, December 31, current year $   171,000.00

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